The third quarter of 2023 continued the real estate trends seen earlier in the year. The London sales market experienced weak demand, leading to declines in both home values and number of sales. However, the rental market remained strong, especially for more affordable units.
Home sales dropped substantially compared to the more robust activity in 2021 and 2022, though they are still slightly higher than pre-pandemic levels. Despite economic uncertainty, further price declines may be limited due to existing home equity and modest growth over the past decade. Sales of luxury homes over £5 million also slowed from recent highs.
Rental demand stayed strong in Q3 although more homes came onto the market. The rental market seems to be becoming more sensitive to pricing. Based on discount data, interest waned for homes renting above £1000 per week, while demand persisted for less expensive units below that threshold.
The London real estate slowdown in sales continued in the third quarter, especially at the high end, while rents stayed strong for affordable options as supply increased but still lagged demand. Equity buffers and pre-pandemic comparisons may keep further sales price drops contained.
Source: LonRes 2023 Autumn Market Report
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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Maiden Capital. The information provided is meant as a general guide only and should not be construed as investment advice. You should always consult your financial, legal and tax advisers regarding private equity and real estate investments